Oil prices have slipped further on Wednesday after a much bigger than expected rise in weekly U.S. crude inventories, and on concerns that a producer meeting scheduled for Sunday in Doha to discuss freezing output will do little to trim glut.
Brent crude was down 62 cents at $44.07 per barrel at 1439 GMT, while U.S. crude declined by 63 cents to $41.54.
The Energy Information Administration said on Wednesday that U.S. crude inventories increased from 6.6 million barrels last week to 536.53 million barrels. Analysts expected only a 1.9 million barrel rise.
But a larger than expected draw in gasoline inventories eased the blow of rising crude stocks. Gasoline fell by 4.2 million barrels to 239.76 million, compared with an analyst forecast of a 1.4 million barrel draw.
“Even with the large build in oil stocks, everyone’s focus is shifting to that summer driving season and with the gasoline drawdown of 4.24 million barrels, I would expect crude oil to continue to rally,” senior market strategist at Chicago-based RJO Futures said on Wednesday.
Further, comments by Saudi oil minister Ali al-Naimi in the al-Hayat newspaper put oil prices under pressure, as he confirmed his country’s position that a complete production cut was out of the question.
“Forget about this topic,” al-Naimi told the paper, when asked about any possible reduction in his country’s crude output.
Iranian oil minister Bijan Zanganeh does not plan to attend the Doha meeting on freezing output but Iran will be sending a representative, an Iranian journalist from the Seda weekly wrote on his Twitter account on Wednesday.
Iran has repeatedly ruled out its willingness to participate in the freeze agreement as it seeks to boost its production in the post-sanctions era.
Morgan Stanley analysts said the market may still be underestimating the potential near-term headline upside risk of the Sunday meeting.
“A deal not only seems likely – as leaks and prior announcements have suggested – but confirmation of the deal, greater clarity about the freeze or hints of further OPEC action could reinforce the bullish sentiment,” the bank said on Wednesday.
The Organization of the Petroleum Exporting Countries lowered its forecast of world oil demand growth by 50,000 barrels per day (bpd) and said in its monthly report on Wednesday further downward revisions could come ahead.
OPEC pumped 32.25 million bpd in March, the group said citing secondary sources, up about 15,000 bpd from February.
A firmer U.S. dollar .DXY, which makes dollar-denominated commodities more expensive for holders of other currencies and concerns over rising U.S. crude inventories also pressured prices.
U.S. crude stocks rose by 6.2 million barrels to 536.3 million last week, data from industry group the American Petroleum Institute revealed on Tuesday, an increase that was more than three times higher than analysts expected.
Official inventory data from the Energy Information Administration (EIA) is due on Wednesday.